A type of consumer loan that fell out of favor in the pandemic’s early months is popular again, the Wall Street Journal reported. Lenders originated $222 billion of personal loans last year, up 31% from a year earlier and 22% from 2019, according to credit-reporting firm Experian PLC. It was the highest level for a full year going back to at least 2011. Lenders cut back sharply on personal loans in early 2020, when it looked like the pandemic was going to devastate Americans’ household finances. People tend to use personal loans to pay for things like home renovations or vacations, or to pay off higher-interest credit-card debt. The loans are often unsecured, meaning lenders can’t seize collateral if the borrower defaults. But stimulus payments kept Americans afloat during Covid lockdowns, and a feared jump in defaults never materialized. The unemployment rate is nearly back to where it was in February 2020. Lending, as a result, has returned in full force, even to borrowers with lower incomes and less-than-pristine credit. (Subscription required.)
